Coronavirus crisis: a five-point plan for worried investors
Adrian Lowcock, head of personal investing at platform Willis Owen, shares his five tips to help anxious investors weather the virus storm.
Don’t let your emotions take over
“If you are going to look at your portfolio and its value then the first thing to do straight after is nothing, go away and make a cup of tea or something stronger and take a break. Let it all sink in and realise that the markets have already fallen and your portfolio has already lost some, if not a lot, of its value.
“Investors need to accept that there is nothing they can do to change that. Volatility is, unfortunately, a big part of investing and it can be good, or bad. It is important to take some time to control your emotions and not let them control your decision making.”
Review your investment plan
“The next step is to review your investment plan, this means revisiting the reasons you are investing, what you are saving for, how long you are investing and the risks you are willing to take.
“In the short-term your appetite for risk is likely to have reduced, but longer term it may not have changed much so try to think about your risk tolerance when markets have settled down.”
Look at your contributions
“The next tip is look at your contributions. If you are putting money into the market, then consider how best to do this.
“Monthly savings can be a good approach as they take out the emotion of the investment decision and put money into the market at the same time each month.
“If you have a lump sum to invest such as your ISA allowance, then consider putting the money into the ISA as cash and drip feed the investment into the market slowly over weeks and months.”
Think about the future
“Focus on the long-term, it can help put events of today into perspective and give you clarity over your investment decisions. The investment world responds badly to black swan events that catch them by surprise as it is a reminder that in the short-term they are not in control.
“Markets will overreact as they rush to re-evaluate their expectations and forecasts.”
“Most importantly though, do not panic. It feels like things can only get worse at the moment and in terms of disruption to lives and the spread of the virus that is likely to be true, but this will all pass and the markets will recover even if it takes a while.”